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Eighty-Eight Oil’s fixed assets increased from $714,000 in
1988 to approximately $13 million in 1993, as the company
acquired buildings, equipment, and land. Current assets
increased from $20.6 million in 1988 to approximately $46 million
in 1993, which is attributable to an increase in cash, cash
equivalents, and prepaid crude oil purchases. At the end of 1992
and 1993, current assets (i.e., cash, cash equivalents, accounts
receivable, inventories, prepaid crude oil purchases) constituted
more than 85 percent of Eighty-Eight Oil’s total assets. Total
current liabilities decreased from $35.4 million in 1989 to $16.8
million in 1993. A large reduction in current liabilities
occurred between 1988 and 1989 after the company paid off $30.9
million in debt. Eighty-Eight Oil carried no funded long-term
debt during the period being examined, so that current
liabilities represented total liabilities.
Eighty-Eight Oil’s financial ratios improved over the
analyzed period and were strong relative to the median oil
industry ratios. Between 1988 and 1993, the company’s current
ratio increased from .3 to 2.7, as compared with the industry
average of 1.3 in 1993. Eighty-Eight Oil’s working capital
increased significantly from $8.5 million in 1989 to $29.3
million in 1993. The company’s accounts receivable turnover
ratio improved from 19.2 in 1990 to 24.5 in 1993, which is
substantially above the industry average of 6.5. Thus, during
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